Get smart with your money
Today’s top story: How to keep your tax refund safe. Also in the news: How to achieve financial fitness, building your gift-buying budget, and how to be smart about holiday spending.
The Simple Way to Keep Your Tax Refund Safe
Protecting what’s yours.
5 Money-Saving Exercises to Achieve Financial Fitness
Getting your wallet in shape.
How to Build Your Gift-Buying Budget
Be strategic.
Why the Holidays Make Us Dumb About Spending
How to stay smart.
Today’s top story: Financial tips for the unexpectedly unemployed. Also in the news: The real costs of using a payday loan for holiday shopping, everything you need to know about the 2016 FAFSA, and what you should do with your year-end bonus.
Financial Tips For The Unexpectedly Unemployed
Don’t panic.
What It Really Costs to Use Payday Loans for Holiday Shopping
The interest rates could shock you.
FAFSA Application: Everything You Need to Know in 2016
Preparing for financial aid madness.
What to Do (and Not to Do) With Your Year-End Bonus
Resist temptation!
Today’s top story: The hidden bonuses of paying off credit card debt. Also in the news: Financial tips for the sandwich generation, how to start preparing your taxes, and the changes coming to your credit card perks.
The Hidden Bonus of Paying Off Credit Card Debt
Your credit score will thank you for it.
The Sandwich Generation: 5 C’s To Deal With Your Financial Challenges
The financial challenges of taking care of your young and old.
11 Tax Moves Every Taxpayer Should Make Before the End of the Year
Time to get organized.
Big Changes Coming for Your Credit Card Perks
What’s in and what’s out.
6 questions to ask before getting a store credit card
Know what you’re signing up for.
Today’s top story: Five credit reports you may not know about. Also in the news: Money gift ideas for the holidays, why your nest egg could be at risk next year, and the top money scams affecting your pocketbook.
5 Credit Reports You Don’t Know About But Should
How’s your casino credit?
5 Money Gift Ideas for the Holidays
Financially creative gift giving.
5 Reasons Why Your Nest Egg Could be at Risk in 2016
Looking towards the future.
12 Top Scams Affecting Your Pocketbook
The latest scams you need to watch out for.
Dear Liz: Your reply about what to do with a 401(k) after someone leaves a job was off base, in my opinion.
You advised the questioner to leave the 401(k) with the former employer until it could be rolled over to a new 401(k) with a new employer. Wouldn’t it be better to roll over the old 401(k) to an IRA? An IRA offers more control and better investment options than a 401(k).
Answer: More is not necessarily better. Some people appreciate the chance to diversify their investments by using a rollover IRA. Many others, however, have no need for thousands of investment options and in fact could be paralyzed by so many choices.
The investment options available for IRAs also can be more expensive than what’s typically available in large company plans. These 401(k)s often offer institutional funds with low expense ratios that are unavailable to retail investors.
Finally, 401(k)s have better protection from creditors than IRAs if the worker is sued or files for bankruptcy, although that won’t be an issue for the vast majority of savers.
People can protect an unlimited amount of money in a 401(k), while IRA protection is limited to $1,245,475.
Keeping an account with an old employer, or rolling it over to a new one, won’t be the right solution for everyone. But neither is an IRA rollover—despite what brokerage houses that profit from IRA rollovers may tell you.
Dear Liz: I have some questions regarding my brokerage accounts. What happens to my investments there if the brokerage company goes out of business? How much of my investments will I be able to recover and how? Also, does it matter if my accounts are IRAs, Roth IRAs, or conventional brokerage accounts?
Answer: Most brokerages are covered by the Securities Investment Protection Corp., which protects up to $500,000 per eligible account, which includes a $250,000 limit for cash.
Different types of accounts held by the same person can get the full amount of coverage. IRAs, Roth IRAs, individual brokerage accounts, joint brokerage accounts and custodial accounts could each have $500,000 of coverage.
So with an IRA, a Roth and a regular brokerage account, you would have up to $1.5 million in coverage.
If you have a few traditional IRAs at the brokerage, though — say, one to which you contributed and one that’s a rollover from a 401(k) — those two would be combined for insurance purposes and covered as one, with a $500,000 limit.
In addition to SIPC coverage, many brokerages buy additional insurance through insurers such as Lloyds of London to cover larger accounts.
It’s important to understand that SIPC doesn’t cover losses from market downturns. The coverage kicks in when a brokerage goes out of business and client funds are missing.
SIPC is commonly compared to the Federal Deposit Insurance Corp., which protects bank accounts, but there’s an important difference between the two.
The FDIC is backed by the full faith and credit of the U.S. government. SIPC has no such implicit promise that if it’s overwhelmed by claims, the government will come to the rescue.